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Gold's Recent Flight Has Little To Do With North Korea

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(Kitco News) - Tensions with North Korea continue to underpin gold, but the primary driver that has pushed the metal to its current price remains the uncertainty around economic growth. Beginning at Jackson Hole, where Fed Chair Janet Yellen appeared dovish, and the progression through weaker economic numbers and employment stats over the past two weeks, all contributed to a growing perception that the Fed is becoming less hawkish. The Trump administration has shown no ability to generate fiscal reform and the President’s aggressive language towards trade, immigration, and North Korea have all contributed to a growing unease and a high level of skepticism on what can be accomplished. The effect is a struggling dollar and an equity market that looks vulnerable. The U.S. debt ceiling deadline is quickly approaching and the President has indicated his preparedness to let the government close if funding was not included for his border wall. You have plenty of solid reasons to remain constructive on gold. At current levels, gold may need some consolidation time. Would look for support at $1,325, with a break above $1,337 suggesting a target of $1,355. Silver has approached our target of 74:1 to gold and is likely to trade at this ratio, unless oil can show some legs above $50. If gold breaks above $1,337, it suggests silver will probe the $18.20 level as first resistance.

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